Current healthcare plans present several problems for delivering effective health care to plan participants. The current healthcare plans are designed based upon a one-size-fits-all for every member of healthcare plans regardless of individual income, affordability, clinical history, or the appropriateness of care. These healthcare plans operate under ineffective resource allocation. Increasing costs are shared with consumers without considering the impact on other healthcare sectors, and financial incentives are misaligned amongst the stakeholders in health care.
There is a substantial disconnect between the most important relationship in health care, that is, the relationship between the patient/participant and the healthcare providers, i.e., physicians, pharmacists, and hospitals. The current healthcare system focuses on managing costs as opposed to improving healthcare outcomes, and optimizing individual segments of healthcare as opposed to optimizing the overall healthcare system. The current healthcare system also focuses on reactive as opposed to proactive healthcare delivery. Clinical trials of various therapies drive healthcare decisions as opposed to provider assessment of the quality of the outcomes. These inefficiencies and shortcomings of the current healthcare system leads to inefficient treatment of patients, including the aging population.
Until the 1980's, healthcare plan sponsors were able to manage the increases in annual healthcare premiums for their members. Managed care then appeared as a solution to continually rising healthcare costs in the United States. Managed care was an attempt at managing resources within healthcare, i.e., to allocate resources where needed. Although managed care was able to squeeze inefficiencies from healthcare delivery for a time, managed care had a fatal flaw in that substantially all of the focus was on managing costs rather than on managing healthcare outcomes, e.g., improving aggregate healthcare which would result in much more efficient utilization of healthcare resources.
Healthcare delivery remains fragmented resulting in sub-optimal allocation of resources and substantial cost inefficiencies. For example, within prescription drug benefits, success is often measured by the ability to keep drug utilization down and to raise patient co-payments. However, this strategy is sub-optimal for a number of reasons. For example, those patients who cannot afford a large drug co-payment have a greater than average probability of ceasing to take their medications rather than filling their prescriptions. This oftentimes results in additional office visits to a physician, or, in some instances, hospitalization. Either circumstance results in a dramatic increase in aggregate healthcare costs. Thus, while pharmacy benefit programs are considered to be successful, the overall healthcare for patients is a failure.
Current healthcare systems have evolved around the medical model of reactive medicine. A patient has symptoms, visits a physician and is treated. To achieve optimal allocation of healthcare resources and dramatically improve healthcare outcomes, physicians must be empowered with detailed and current information about their covered patient populations so that the medical model can become proactive. The evolution of technology and medical research has provided the opportunity to identify patients with a high probability of contracting certain disease states in the future. This evolution has dramatic potential for improving healthcare outcomes and decreasing the increase in the annual cost of healthcare. However, the current healthcare system does not empower providers to offer the best of preventive medicine based upon the developing technology and medical research.
Several other unintended negative consequences have resulted from the managed care experience. A key failure of managed care is that the vital link for healthcare delivery between the physician and the patient has been broken. Although the primary care physicians are essential to delivering quality healthcare to patients, managed care has placed many roadblocks in front of the physicians by discouraging, and in some instances preventing, the delivery of quality healthcare services.
Another key failure of managed care is the misalignment of financial incentives. Resources have been taken away from healthcare providers in many instances and reallocated to non-providing healthcare entities whose primary purpose has been to aggregate healthcare supply and demand, that is, the provider networks and the patient populations. Providers' incentives to provide quality medical treatment have been curtailed significantly, resulting in many physicians' deciding to terminate the practice of medicine. A shortage of physicians is on the horizon due to the lack of incentives for providing quality healthcare.
Another failure of managed care is the inability to provide healthcare to an aging population. The aging population in the United States is beginning to utilize more healthcare resources at a time when many healthcare plan sponsors are curtailing or eliminating healthcare benefits for retired workers. Thus, increasing strains are placed on the already-overtaxed Medicare benefits system.
The current healthcare systems do not have an effective ability to deliver the bio-engineered pharmaceuticals of the future. The initial completion of mapping of the human genome is generating unprecedented research into drugs of the future to combat life-threatening disease. Many of these bio-engineered drugs are extremely expensive and require special administration by healthcare providers. Thus, healthcare systems must adapt to a model which matches utilization with need, that is, a balance between too much and not too little healthcare benefits.
Due to double digit increases in annual premiums and a soft labor market, a number of health plan sponsors give participants a fixed-dollar amount for health care during the year, and then allow the participants to choose a health plan in which to enroll. Although the fixed-dollar plan does give the participant greater choice, it does nothing to improve health care outcomes. Nor does the fixed-dollar plan empower the participant to know which plan is best for him or her. The plan choices typically represent a large number of different commercially available plans, and are not customized to the particular plan participant. Further, the providers are not empowered with tools to assist them in the delivery of higher quality health care. In addition, they are not kept in the loop as to what is happening to a given patient or an entire patient population assigned to them.
“Customized” health plans exist in the public domain which offer different participant premiums based upon limited aggregate income levels. However they are very limited in scope, and do not superimpose health history and current health over income to further refine plan design. Healthcare professionals are attempting to reduce the growth of healthcare expenditures by simply mandating cuts, or discouraging care through onerous and lengthy preauthorization or pre-certification processes. These controls do not solve the real problem of escalating healthcare costs.
Thus, a need remains for a healthcare infrastructure that delivers appropriate and affordable medication to participants. A further need remains for a healthcare infrastructure that applies current outcome research to healthcare plan design, and that provides up-to-the minute communication of healthcare episode data to providers to aid in their decision making. A need also remains to control healthcare expenditures by adopting and monitoring special programs focused on high-frequency healthcare episodes to reduce the volume of episodes to successfully treat a patient. Another need remains for a healthcare infrastructure that incorporates data platforms for capturing, managing, analyzing, simulating, and communicating information and action steps to be inclusive of all aspects of healthcare.